Happy Friday. In today's newsletter, a 3PL dodges liability in a recent decision, reigniting calls for a Supreme Court review of prior cases. Plus, we look into Zerobroker's mission to eliminate the freight broker role after a successful seed round, and we talk about the looming government shutdown's impact on freight. Further on, drone delivery company Zipline gains a major win for the future of the service.
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In today's email:
Three Freight Headlines: Freight tech platform Zerobroker raises seed round and aims to eliminate brokers, U.S. government shut down risks freight, and the future of rail looks optimistic.
3PL Liability: Mixed Verdicts Call for Supreme Court Review
Around the Freight Web: An argument fortruck driver hourly wages, GenH2's record hydrogen run, EEOC sues TFI for discrimination, plus more.
Freight Meme of the Day
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🐔 WHAT’S COOKIN’ IN FREIGHT
Zerobroker, which just raised a $6.5M seed round, has an opening for a 'carrier-sales manager' position—an unexpected role for a non-broker platform.
🤔 Bye-bye, Brokers? Zerobroker, a Californian startup, has secured $6.5 million in seed funding to drive its mission of eliminating freight brokerage fees, a $300 billion industry in the US. To clear any confusion, Zerobroker asserts it "is not a freight broker" but a platform designed to simplify logistics by enabling direct connections between shippers and truckers, with a goal to automate 90% of routine tasks. CEO Georgy Melkonyan emphasizes the urgency of modernizing logistics, citing his platform as a step towards enhancing efficiency and transparency in the industry amid the digital era that increasingly renders traditional broker roles obsolete.
🚨Concerns in Freight and Trade Amid Potential Shutdown. A looming U.S. government shutdown, likely at 87%, endangers the freight and aviation sectors. Over 17,000 FAA employees and the majority of the Federal Maritime Commission face possible furloughs, escalating existing labor shortages and halting vital operations. Border concerns heighten as Customs and Border Protection may lack resources for seamless import operations. Globally, this shutdown intensifies as trade plummets sharply by 3.2%, marking its steepest drop since the pandemic, adding to the mounting uncertainty and disruption in global freight and trade.
🚂 U.S. Rail Freight on the Rise. Investors are showing confidence in rail freight as Amergin and Greenbrier report a surge in railcar demand. Greenbrier has received orders for 15,300 railcars, totaling $1.9 billion, marking a significant uptick in the industry. In addition, a $1.4 billion federal grant will enhance the U.S. rail infrastructure by funding 70 projects across 35 states, aiming to improve connectivity and withstand extreme weather. Intermodal providers anticipate stable rates in 2024, providing a consistent outlook for the industry's future.
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3PL Liability: Mixed Verdicts Call for Supreme Court Review
An Illinois appellate court has cleared a third-party logistics provider (3PL) from an $18 million verdict over a truck accident, setting a crucial precedent for similar cases in the future.
In 2016, a teenager was severely injured in Illinois when struck by a truck owned by Dakota Lines. The victim’s mother, Francine Cornejo, was awarded $18,150,750 after a jury ruled in her favor. The defendants in the case were Dakota Lines, its driver Gordon Lewis, and Alliance Shippers, the 3PL involved.
The 3PL's Defense
Alliance Shippers appealed the verdict, claiming they couldn't be held liable as a 3PL.
Unlike federal cases invoking the FAA Authorization Act, this was a state court case.
The Act protects 3PLs from liability in cases of theft and injuries.
The Verdict
The unanimous three-judge panel found in favor of Alliance Shippers.
They argued that Alliance had no control over Dakota, making them not liable.
An "n.o.v." judgment, meaning "notwithstanding the verdict," was granted because the evidence overwhelmingly favored Alliance.
Why No Liability?
The crux of the case centered on determining whether Dakota and its driver, Lewis, operated as agents of Alliance. The court concluded they did not, highlighting several influential factors:
Alliance didn't pay Dakota's drivers or control their routes.
Dakota and Alliance adhered to an agreement where Dakota acted as an independent contractor.
Dakota could work with other brokers and had control over its personnel.
This lack of control and financial bond underscored the court's decision to absolve Alliance of liability in the accident.
What's the Significance?
This case’s ruling is significant as it adds clarity on what constitutes insufficient control, which is pivotal in determining the liability of 3PLs in similar accidents.
Mixed Verdicts on 3PL Responsibility
C.H. Robinson (Miller Case)
Federal Court
Argued protections under the FAA Authorization Act.
Decision: Did not prevail, held liable.
GlobalTranz (Ye Case)
Federal Court
Cited FAA Authorization Act for protection.
Decision: Prevailed, not held liable.
Landstar (Stolen Cargo Case)
Federal Court
Invoked FAA Authorization Act for defense.
Decision: Ultimately prevailed, not held liable.
Types of Cases Arguing Liability
Negligent Hiring or Negligent Entrustment: If a 3PL or broker hires an unsafe carrier leading to an accident, they may be liable for negligent hiring.
Vicarious Liability: Brokers or 3PLs may be liable if they have significant control over a carrier, akin to an employer's role.
Fraudulent Representation: A broker or 3PL may be liable for damages if falsely representing a carrier as safe or qualified, leading to an accident.
Legal experts, including Marc Blubaugh, underline this decision in favor of Alliance as a precedent, emphasizing the importance of the degree of control a broker has over a motor carrier in such legal scenarios.
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AROUND THE FREIGHT WEB
The average truck driver is driving fewer miles than they did a decade ago. What does that mean for mileage pay? Source: Justin Martin/X (Twitter)
📈 Truck Driver Hourly Pay. A tweet from Justin Martin highlights the decreasing average miles drivenper year per truck, drawing a conclusion that the average trucker probably sees less than $20/hr. Is it time for a switch to hourly pay for truckers?
🌿 GenH2's Record Hydrogen Run. Daimler Truck’s GenH2 covers a record 650 miles in Germany on a single hydrogen fill, demonstrating significant potential for hydrogen-fueled transportation.
⚖️ EEOC Lawsuit against TFI Subsidiaries. The EEOC sues two TFI subsidiaries for alleged discrimination against gay employees, accentuating workplace inequality issues.
🤝 WSI Acquires El Paso Carrier. WSI acquires Sky Transportation, expecting to add more than $60 million in revenue and expanding cross-border capabilities.
🚁 Zipline’s Drone Delivery Milestone. Zipline secures FAA authorization for drone deliveries without visual observers, marking a significant step towards scalable and affordable drone delivery services.
FREIGHT MEME OF THE DAY
Also, check out:
🎧 The FreightCaviar Podcast. Listen to this week's podcast on Spotify & Apple Podcasts.
🤝 Master the essentials of freight brokering with Freight360's comprehensive online course, tailored for both aspiring brokers and current agents looking to enhance sales and operations. Receive $150 off your course with our code FREIGHTCAVIAR. Click hereto learn more.
I’m Adriana, a writer and editor at FreightCaviar. I’ve covered everything from freight tech to industry lawsuits and market shifts, helping scale us to almost 14K subscribers. My goal: to make logistics stories digestible, clear, and fun to read.
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